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tv   Mad Money  CNBC  January 15, 2013 6:00pm-7:00pm EST

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ing hot tar... great businesses deserve great rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice. time for the final trade. tim? >> spread trade that's working again. eem long, short spy. >> guy? >> baidu down today but i still like it. >> karen? >> timken. >> who doesn't? keith? >> i'm not going to make grand statement that the bottom is in apple but i would say buy it for a trade to $518. >> i'm melissa lee. thank you for watching. see you tomorrow at 5:00 for for
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"fast money." "mad money" with jim cramer starts right now. i'm jim cramer and welcome to my world. you need to get in the game. "mad money." you can't to ford to miss it. rise and shine and thank you for waking with cnbc. i'm jim cramer and there is always a bull market somewhere. get up and make your best move. >> i'm cramer. welcome to "mad money." welcome to cram ee mxcramerica. call me. snoozing. that is what the market is
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doing. a little doze. it takes little gains after absorbing early morning losses. but it is all about the nap. s&p calling up 11. thank you apple. see the market has gotten tired here. and it rests at the opening for waking up from it's slumber and finishing perky after the bell. it needs to catch a couple of weeks. we keep hearing how valuations have are gotten stretched and then it crawls higher into the close. to me, i'm an old napper from all the way back. like you need me to wake you up in the morning with the cnbc alarm clock app
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♪ hallelujah >> jp morgan announced that it was too rich and downgraded. jp said it lacks callous to go higher. the reason stretch valuations the lack of callous. and jp morgan pulls united continent continental. i got dozens of these and they are always the same. buy the whole, it is central casting downgrades. i suspect you will be hearing one of them tomorrow about the great home builder no doubt because of stretch valuations. don't be surprised when they tell us the same thing in the end about facebook.
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it turned out to be as powerful as blockbuster video yup? repeat after me, stock valuations. maybe they were waiting to get kicked to the koucurb. and something that can make us some money. first, let me just say that this market has been nothing short of remarkable. this stock seems to cut the heart out of this every day. it is getting ugly out there. and it is so bad on twitter some are blame iing my daughter for
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liking the new apple itunes. still, it may lead to a downgrade in us debt. we are being told that the debt ceiling rangeling could be worse for the country than going over the fiscal cliff. how is that for frighting? representative jason, hush-hush sweet speaker whatever happened to baby budget? you get the picture so to speak. this morning a reliable steady growth story. the end of the federal tax holiday has to hurt retail doesn't it? and the facebook disappointment. you have this mystery
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announcement coming. instead we have an announcement of a tool to search on big social networks. what a bust. yet the market didn't get hammered and then we got the nap time and the fresh bull came to play into the bell. what is happening here? there have been different time as long the way up where we had this same exact situation like what we are seeing here today. another occurred in the first three years in the '.90s. and every single case, every single one i can recall we get
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this moment where the market didn't get tired, but the analyst did. many big cap stocks had run up into their price points. and they stayed bullish or they actually even raised price pointed and it was a mistake. and i'll tell you, let's use it, an endless target party. 700 goes to 900 and only if there were a two for one stocks play. the analysts were gun shy. not the cheering, but the support of analysts who might be able to recognize that buzz is good enough. given the litany of events, the tax holiday loss, i can't blame anyone for getting off the bull.
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the brakes in the action often don't break like today. what happens? what happens if evaluations turn out to be attractive or what happens if the world gets better? what happens if we solve the debt debacle? once we will through the debt ceiling and the last chance to derail the term. i think i know what happens, the same thing that has happened always when we have had so many break outs they are left behind by the wall of worry. ask yourself, do you think that this many analysts could be right? do you think that these companies are going to prove brilliant exit prices? no.
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i bet that this is one of these moments where the world economies are going to be better. i say that because it is the same batehavior i've seen over d over and over again. they are days to buy, not sell. in order to get into this bull market, here is the bottom line, i think this market is simply taking a snooze after a big bull run. but wakes itself up perhaps with my clock and if history serves me right, they go higher not lower and it is turned out that their evaluations ended up being catalysts galore. bob in florida, bob >> it is fwrat to tais great to. south florida by way of teaneck,
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new jersey. i'm calling about krispy kreme donuts. i sold it and forgot about it and now it seems like they reinvented themselves. the stock is up 70% since mid november and still trading. even talk about take over. >> i believe there is a turn going on. it has been ages since i looked at it. the last time i looked at it i chipped my tooth. i will do more work on it and see where this one can stop. nobody does know. robert in massachusetts, robert. >> booyah jim, hail from massachusetts. >> fantastic. >> there you go pats i don't
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know. >> sounds good. today, retail sales numbers were released for december and the 4th quarter. >> right. >> and the terms were solid firm, somewhat above the expectations. now, yesterday, a company called eastern pacific released their numbers with the upside bias going forward. can you comment on this company? >> this company is the old liz claiborne. >> these guys seem to be the right time. all right please. don't be alarmed the market just needs to wake up and based on my
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exper yeens experience it will go higher not lower and indeed the valuations they are not stretched at all. "mad money" will be right back. ♪ >> coming up, right remedy? cramer has been looking for companies on the cutting edge of research that could be ready to rise. now that the split is done, which stock could be ready to run. and later, america's over whelming supply of natural gas has cooled out the price of this commodity. should you be looking to fill up on the fuel. cramer is going off the charts to find out. plus, he has his eye on ways to beat america's debt debate by investing in trends that won't
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quit. with new comer loredo petroleum. all coming up on "mad money." >> don't miss a second of "mad money." follow on twitter. send jim and e-mail to madmoney@cn or give us a culture at 1-800-74 1-800-7 1-800-743-cnbc. or head to our website. >> tonight, the moves he is making to keep pennsylvania strong. kudlow report 7:00 p.m. eastern on cnbc. ♪
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one of my top ten themes for 2013 don't just sit there, do something as in create value for shareholders. or we like companies whose ceo's have seen "the shawshank
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redemption" who need to get busy living or get busy dying. their parts are worth less together than they would be apart as separately traded companies. i call these my breaking up is easy to do stories. they have made us serious gains. but what do you do when the break up happens? and isn't that the problem right now with long time favabbott labs? i always saw it as a fast growing medical products company that was being held back by it's slower growth fopharmaceutical business? it was going to split itself into two separate companies.
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i thought this was a terrific plan. i recommended the stock in 2011 and abbott labs gave you a healthy 24 return. on new year's eve when everyone else was out celebrating. abbott completed their corporate divorce. where before there was one company, now there is two. the new abbott labs, one that yields 1.7%. since the split up i have been inundated with people on twitter asking me what to do with the company. and even more so over the next two years, in other words, the
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stock to buy would be abc. but this is no ordinary spinoff. i like it so much that my charitable trust is sticking with abbott 2. the reason, the whole point of this spin off was to free abbott lab s from the shackles of the business. now it can be unlocked. it is in a new position to grow revenues. you got nutritionals and it should expand at a rapid 35%. it still has a ton of room to
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expand it's margins which are 500 basis points below the average. we like it because it is a major component to helping to contain heal health care costs. the reason abbott can grow so quickly is because the company gets 40% of revenues from emerging markets. especially super fast countries like india and china. and in the next few years that can go to 50%. 10 to 20% of sales from emerging markets. abbott labs is retaining white as ceo. he's the guy who masterminded the break up.
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if he had decided to go to abc ip stead. yeah, he is that good. i think his guide is conservative and beatable. abbott's forecast is for margins to expand. for every 100 basis points the earnings per share is up 15 cents. what is going to happen, you are going to be able to say, abbott has a healthy balance sheet. that means the company still has a lot of flexibility or they could make some smart acquisitions. the old abbott lab sold, and the new sells for 17 times the earnings rate. this is what is called multiple expansion and i predicted that
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we would see that after the break up. i could see the stock going for 38. on the strength from the re-evaluation from the spin off. 4.7% but i think the stock is not as good as abbott. but there is nothing big in the pipeline that would fuel much growth down the road. along with the global footprint that is good. but a single drug this is what is the problem. it is counts for 40% of sales and that drug could start facing competition and the market is going to start facing that. that is a huge cliff and we don't know whether they have anything in the pipeline big enough to replace it. they are working on a drug for
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he hep c. about the same valuation as pfizer. here is the bottom line. when a company breaks up. you need to decide which part to keep. with abbott. it was easy. so forget about the pharma business. stick with abbott yes which i think can be bought i rarely ever say this. don't need a pull back. i'll buy right here. after the break i'll try to make you more money. >> coming up. america's overwhelming supply of natural gas has cooled off the price of this commodity. cramer is going off the charts to find out.
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office superstore ink retailer in america. now get $6 back in staples rewards for every ink cartridge you recycle when you spend $50 on hp ink. staples. that was easy. now that 2013 has arrived, what is in store for natural gas? for years now, the prices that fallen and remain at low levels and when that happens energy companies stop drilling. this was the story in 2012. the number of natural gas rigs was down 46% from the year before. when companies cut back enough, that was something that happened
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in the second half of 2012. the technology for extracting this was maybe the cycle was broken. that is why tonight we are going off the charts to figure out where it might be headed. garner thinks that trading natural gas is always a dangerous game. hence that is why they call it the widow maker. garner believes that it is still too early to get bullish. there is a strong tendency to rally every year through mid april are. the commodity suffers a great decline in mid-january. in short, she thinks natural gas
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is maybe to go much lower. take a look at this weekly chart in natural gas. see that is that wedge pattern got that? since this pattern, okay, this wedge gives natural gas a ceiling of resistance at $3.70, the wedge is here, you have to look at this, just look at this line for a moment. there is a lot going on in this chart. now look at this level, this is the floor, it is $3.20. garner expects natural gas to be exposed by a strong seasonal tailwind. in that month, she thinks it is likely it could breakdown. falling through the floor and
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making a sell off. i thought this was a good anecdote. look at the bottom of the chart. the relative strength independent cater or the rsi or the williams percent range. we mentioned the rsi often on and off and have encountered the williams percent range. this is a tool similar to this and helps measure when the under line securities are underbought or undersold. sellers have left the building and garner points out that this is not over sold. therefore there is a lot of room for this to get ham fmerhammere. it has not taken out those
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oversold levels. garner thinks that prices could tumble $2.60 which was the starting point at the beginning of september. if you are someone who is looking to play the seasoned rally. garner wants to pick up the small position. however, natural gas has a real talent for pushing the limits. that would be shocking to me. but she is the chartest and that is what she is saying. and she thinks it would be hard to justify it with $2 natural gas. in this market, if the pullback to $2.16 happens she thinks that would be a good time to buy natural gas. what if she is wrong about the
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late january pullback and it breaks out above the ceiling of resistance? she has a plan for that too. she thinks that could trigger a quick run to four and $4.50. her real thrust here is that her run is going lower. the pull back could be on the horizon. check out the daily chart. what is at the bottom of the chart. this is interesting. this is why i wanted to do this. the trading commission measures and releases statistics on what types of traders are involved and whether they are long or short and it is in the report called the commitments of traders. the cot report. they classify commodity traders
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into three groups smaug small, large and commercial heathers. these are the money managers and according to the latest data. they are holding a net short position in natural gas that is not big. as a group they are short about 150,000 contracts. that is light. let's say it is not accessible. she notes that in the recent past they has seen speculators hold 250,000 contracts. what does it mean? garner is suggesting that the short natural gas trade is not yet over crowded and we could therefore see additional selling pressure as they increase their bets into this near term
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strength. how, at some point this group will start covering the positions and she believes that the covering alone could trigger the rally. so these guys get bigger on the short side and this commodity breaks down and then you go and buy the commodity. but not before the breakdown. my view? i do not recommend trading commodities of new gold. she thinks it will rally from a lower level and that is crucial. cheap energy is one of my natural energies for 2013. but it is terrific for consumers like the companies that i have been recommending so aggressively. even if you are a bull, no, you shouldn't been pulling the trigger. you have to wait for it to go lower.
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to me that is one more piece of evidence that 2013 will be one more piece of natural gas. which is pretty much everyone in the book. let it come in. don't believe in this false four day rally. rowan in texas. >> hi jim big booyah to you. >> i like that. real good how about you? >> first of all, many thanks to you for giving us word on honey well. >> dave cody is doing a magnificent job there. at this time i want to ask you about apa. they have some shaky news today in australia. but it seems they have problems lined up in canada and elsewhere. looking at the current stock
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price and future predictions not only for the company and the sector as a whole, do you suggest them? >> it is probably one of the best run companies out there. but those are not helping it. the chart looks like it is firming up. but if that is the case we are going to make money away from oil stocks. >> let's go to chris. >> jim cramer, this is chris, thank you, sir. i want to tell you very quickly, you are one of my heros, i believe that when you talk about the market, i just believe that you are spot on, on the things that you say and we appreciate that. >> you are terrific. it is tough to come out here every day. i joke with my friend coming out here every day, it is nice to hear from someone who says thank
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you. >> i appreciate you, i know that you have a lot of information in your head. i know that, sir, my big question is about i guess it is magnum, hunter resources. is it a well run company? do you think that it is a growth story with the possibility that the chart trajectory might be positive over the next three to five years? >> it is actually a coal option on oil. if oil goes up a lot the stock doubles. if oil doesn't do anything the stock goes down. if you think oil is going higher. it is a terrific play. if you don't, don't touch it. the charts show that natural gas can go lower but that is not a bad thing. remember, i want natural gas low, not because i believe in the natural gas stocks, but
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because the chemical plays go low. don't move, the lightening round is next. what are you doing? nothing. are you stealing our daughter's school supplies and taking them to work? no, i was just looking for my stapler and my... this thing. i save money by using fedex ground and buy my own supplies. that's a great idea. i'm going to go... we got clients in today. [ male announcer ] save on ground shipping at fedex office.
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it is time for the lightening round. sell sell sell sell sell. i do not know the cost of the stock ahead of time. are you ready ski daddy. starting with adam in new york. adam. >> booyah jim. >> booyah adam. i want to know what you think about agnc. >> i used to fight this one tooth and nail. i think the yield may not always stay that high. but i'm going to say, buy buy buy. >> samantha. >> i'd like to know if silver coins should be held onto or sold? >> i like them. do not sell them. lou in florida. >> how are you? >> how are you? >> good, good, hey i was trying
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to get information on -- >> i think the market the economy is strong. i would say that is a good situation. aaron in california. trying to find out about cat. >> i think cat is too high. i think the earnings are not going to be there. i don't want to buy cat here. >> let's go to russ in ohio. >> hey, jim. big bowling green state university booyah to you. >> students love it. how can i help? >> i'm looking to start a position in kelly employment service. >> i think that is very wise. >> caswell in rhode island what's up? >> first energy is up. everyone is telling me this is
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the next one to go much lower. don't buy. i believe the yield is good. the economy is getting better. leon. >> hi, jim, from des moines iowa. >> how are you, sir? >> pretty good. >> back in the first part of lart year. medco pharmacy and -- scripts merged. so i thought they were a sure winner and bought some -- added it to my portfolio in early april. i called you and you recommended them and like a charm they went up 15%. but they have been going down. >> my take is that it is okay to buy. i like cvs caremark. >> and that is the conclusion of
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the lightening round. >> coming up, reiner jised? cramer has his eye on ways to beat america's debt debate. tonight he is drilling into american energy development. could you strike oil with this fresh face? joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade.
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with multiple lacerations to the wing and a fractured beak. surgery was successful, but he will be in a cast until it is fully healed, possibly several months. so, if the duck isn't able to work,
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how will he pay for his living expenses? aflac. like his rent and car payments? aflac. what about gas and groceries? aflac. cell phone? aflac, but i doubt he'll be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a get-well card at ♪ ♪ ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit.
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a few short years ago the idea that america could become energy ipd independent, but it is within our grasp. i wanted to talk about one of the companies that is making the american energy renaissance possible. lpi. it is down in texas as well as a sizable position. you may not have heard of
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laredo. stocks ending up slightly above the ipo price. however, i think this one is worth bringing to your attention. for 2013 the company's production has gone up. let's take a closer look with the founder and chairman and ceo who has created and sold two oil companies before this. although both of them were private so you couldn't get in on the action. have a seat. the other two were private so we
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don't know. is this one like those if we buy the stock? >> the other two companies were private. we were looking at going public. we wanted to see if someone would pay us for it. this company was different. we got to the point where we realized that we captured a larnge group of drilling companies. and it was probably needed to capture the money. >> we k the ability to drill these oil wells and stimulate them has been a change in just a
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global change in the way the energy business looks. th we think these targets are exception al. they still don't get it. what was in the ground. suddenly we were able to access what you couldn't? we knew all along there were many of the zones that were generating oil and gas for years. we would get just enough oil and gas to mess up the drilling system. we can now produce these zones that we knew were there for generations. >> who is unwise enough to sell you properties given your history and success? >> there was a lot of running room out there. we have been to prior companies and we bought our first acres
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out there in 2008 in a county where there was one other drilling rig. >> some others are worried that you are going to out spend your cash flow. they had bigger eyes than what they had the money for. aubrey mcclendon, some feel he outspends. >> how do you know your cash flow will cover it? >> last year we articulated a greater outspend because we were trying to get the data to develop a plan. we think we have been very, very disciplined and still have a lot of liquidity left and we think we have a couple of years of
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drilling on that and as a revolver should grow, we think we are good. but we have access to perhaps public equity. and he think this property is set and great for a joint venture. we have assets that aren't strategic to us. we are not capitol constrained today. we are running at the cadence we would run at if we finance this 10 or 15 year period. >> crude is great. is there turn coming in natural gas liquids as chemical gas started to burn here? >> i also think that with the
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advent of this drilling technique we are going to be able to bring the supply to meet the demamandemand. i think natural gas prices grow. >> that sounds more like eog. which is successfully navigated. >> i want to thank randy because of his reputation. you have to take a hard look at this. >> "mad money" is back after the break. thank you, sir.
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buy dell or not to buy dell. dell does go private i think it will be at roughly almost 15. they broke the news this afternoon that they would like to do a deal at 14 or a15. there is only so much cash flow to go around to continue if the deal was done. he will not do a deal that could hurt the long-term fortunes of his company. because there isn't enough earnings for them to keep it up here. even though it is deal that has been the company. those fortunes have been spent
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to design systems that are loved by governments. and that is terrible. plus we know that the enter price that has been ruled by the crowd. it is funny when the stock was only at 11 i thought what an opportunity. but as it got closer to 13. if you owned it you need to sell it if it goes closer to 14 tomorrow. let's talk about if the stock goes back to 10. at that time remember half of dell's business is global. it isn't including the possibility that we develop a tax regimen in this country. but that has to happen and it doesn't include the notion that
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you and i haven't thought of. a wealthy player that believes in the vision of being a one stop shop for the smaller business companies. the idea that could be considered reasonable. it will be replaced by a smartphone and a tablet that is certainly possible. if you think it is the latter than $11 well, i got to tell you, you should be in dell. this stock isn't going back to $8 and change. but you better wait until it cools down before you buy. as we know, no man's land is a very, very bad place to be. stay with cramer.
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next straight talk from the keystone state. the moves he is making to keep the state strong. the cud ho report next on cnbc. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello? ally bank. your money needs an ally. ♪ [ male announcer ] don't just reject convention. drown it out. introducing the all-new 2013 lexus ls f sport. an entirely new pursuit. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn
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